What are the Benefits of Hiring Internal Candidates?
When you’re looking to hire new top talent, is it better to hire internally or externally? This is not a new question, and it does not have an easy answer. In our experience of attracting, developing, engaging and retaining top talent, it depends on what you are trying to accomplish. But one thing is for certain, there are definitely some key benefits of hiring internal candidates.
The Top 2 Benefits of Hiring External Candidates
While we list the 7 top benefits of hiring internal candidates below, there are definitely two major benefits of bringing in outside talent.
- New Perspectives, Skills & Approaches
The one clear and persuasive advantage to hiring from the outside is that you bring new ideas, skills, experiences, and energy aboard. Companies benefit from multiple perspectives and diverse experiences. Outsiders can also send a clear and powerful message to current employees about the need for change in terms of skills, performance expectations, drive, and cultural direction.
A fresh set of eyes can do wonders to help companies and teams get to the next level.
- On-boarding Feedback
If you hire externally, you will get fresh feedback and data about the impact of your on-boarding processes. If you plan on hiring a lot of new talent, the faster you can incorporate new hires into the fabric of your organization, the faster they will contribute to the company’s overall business success.
The Top 7 Benefits of Hiring Internal Candidates
Here are seven of the top benefits of hiring internal candidates from talent management consulting experts when you are looking for top talent to build current and future capabilities:
- Length of Time to Hire
Look internally first if you need to fill a position quickly. It takes far less time to hire from within because your talent pool is on site, easily accessible, and known. The candidate is also already familiar with how work gets done at your company.
- Speed to Productivity
While there is always a learning curve with a new role, the on-boarding process is usually much more efficient with existing employees. It is generally acknowledged that external hires take up to about two years to be fully productive in their new jobs. Everything is new – they have to build relationships and figure out where to go for support and resources.
- Institutional Knowledge
Hiring internally allows you to build on the employee’s knowledge of how the company works and who does what. They have already developed many of the firm- or industry-specific skills needed to succeed in your environment.
- Cultural Fit
There is no doubt that an employee who does not fit the organizational culture will not be as effective as an employee who understands and adheres to the values and behaviors that the company espouses. Presumably, if you hire from within, you can be pretty certain that the employee understands and is aligned with the organization’s culture.
- Morale and Company Loyalty
If you hire from the outside as a matter of course, you risk undermining employee engagement and their loyalty to the company. Hiring from within lets employees see real opportunities for career advancement. If high performers do not see a path toward advancement and growth, they will be discouraged and more likely to leave.
Almost always, it is more expensive to hire externally. Hiring managers have come to expect to pay 10 to 30% more for outside hires. This can be because of external hires’ more impressive resumes or because it costs more to lure them away from their current position into one that is somewhat uncertain.
- Performance On-the-Job
Despite getting higher pay, Pennsylvania Wharton School professor Matthew Bidwell’s research on hiring decisions shows that external hires receive lower performance scores during their first two years at a new organization as compared with internal hires in similar positions. In other words, it often takes longer than expected for new hires to perform. And, unfortunately, some new hires never quite fit in.
The Bottom Line
If you need to grow headcount, consider your unique situation carefully before hiring. Prioritize the factors that are most critical to your success. Then don’t settle.
To learn more about how to hire top talent, download 5 Steps to Defining & Attracting Top Talent